An influential shareholder advisory firm is backing a SandRidge Energy Inc. shareholder's push for a leadership change at the Oklahoma City oil company.
Institutional Shareholder Services said it is reluctant to recommend major changes to a company's board because of potential unintended consequences, but at SandRidge, “the apparent failures of stewardship on this board are legion.”
Maryland-based Institutional Shareholder Services provides governance research and analysis to more than 1,700 clients to help them make informed investment decisions.
The report released Friday examines SandRidge's ongoing proxy fight with hedge fund TPG-Axon Capital, one of the company's largest shareholders.
It recommends replacing five of SandRidge's seven current board members, an option that is not available to shareholders at this point.
“In making its case that such drastic change is needed, the dissidents have not only pointed to the erosion of more than 70 percent of market value over the nearly six years since IPO, but have advanced a credible narrative that the company's abrupt, piecemeal approach to corporate strategy and concomitant lack of capital discipline have increasingly limited the company's financial flexibility, and engendered a deep distrust in the market,” according to the 24-page report.
SandRidge said Friday it strongly disagreed with the advisory firm's recommendation.
“We have a strong and experienced board that is committed to delivering value to all stockholders,” spokesman Greg Dewey said. “We continue to urge SandRidge stockholders to reject TPG-Axon's nominees.”
SandRidge has argued TPG-Axon's proposed directors do not have sufficient experience to shepherd the company into the future, but Institutional Shareholder Services concluded TPG-Axon CEO Dinakar Singh and Edward W. Moneypenny have financial and capital market experience that would benefit SandRidge.
Singh heads TPG-Axon and is a former partner at Goldman Sachs, while Moneypenny was chief financial officer at three energy companies, including Oryx Energy Corp., which merged with Kerr-McGee Corp. in 1999.